Stock market correction is healthy, but expanding trade deficit and export collapse are dangerous signs: Mian Zahid

KARACHI
Mian Zahid Hussain, President Pakistan Businessmen and Intellectuals Forum & All Karachi Industrial Alliance, Chairman National Business Group Pakistan, Chairman Policy Advisory Board FPCCI, and Former Provincial Minister Information Technology, said today that while the Pakistan Stock Exchange has witnessed a necessary technical correction after a historic bull run, the real economic concern lies in the rapidly widening trade deficit and the sharp decline in exports.
Speaking to the business community, he noted that the KSE-100 index’s dip to the 185,543 level after touching an intraday high of nearly 187,905 represents a healthy consolidation phase.
He emphasized that profit-taking by investors, particularly in the banking and energy sectors, is a normal feature of a vibrant capital market and that the fundamental sentiment remains positive with a strong support floor established around the 185,000 mark.
Mian Zahid Hussain warned, however, that the financial markets are increasingly decoupling from the ground realities of the manufacturing sector. He expressed deep alarm over the latest data showing that the trade deficit for the first half of the current fiscal year has widened by 35 percent to reach $19.2 billion.
He termed the December export figures, which plummeted by over 20 percent year-on-year to just $2.32 billion, as a wake-up call for policymakers. He stated that while the stock market celebrates improved macro indicators, the real economy is struggling to compete globally, and reliance on import-led consumption is once again putting pressure on the external account.
The veteran business leader highlighted that the textile sector, which is the country’s primary foreign exchange earner, is facing a deepening crisis due to the failure of the cotton crop.
He pointed out that with the national cotton crop stalling at approximately 5 million bales, the industry is now forced to import nearly 5 million bales of raw cotton to keep mills running. He explained that with the dollar trading around Rs 280 and energy tariffs remaining uncompetitively high, the cost of these imports will squeeze the margins of spinners and weavers to the breaking point.
He added that the liquidity crunch caused by recent changes to the Export Facilitation Scheme is preventing many Small and Medium Enterprises from booking these essential raw material shipments, effectively stalling production.
Mian Zahid Hussain urged the government to look beyond the stock market index and take immediate administrative measures to arrest the slide in exports. He called for an urgent review of the liquidity mechanisms for exporters and demanded a targeted energy tariff relief package for the textile sector to prevent widespread industrial closures.
He also noted reports regarding the potential deregulation of the sugar sector as part of structural reforms, suggesting that while deregulation is generally positive for transparency, it must be timed carefully to avoid adding inflationary pressure on the common man.
He concluded that sustainable economic stability can only be achieved if the export base expands in tandem with the capital markets.